Flavio Cattaneo Named CEO of Telecom Italia
March 30 2016 - 4:30PM
Dow Jones News
MILAN—Telecom Italia SpA said Wednesday it has appointed Flavio
Cattaneo, currently chief executive of train operator NTV SpA-Nuovo
Trasporto Viaggiatori, as the new CEO of Italy's largest
telecommunications operator.
Mr. Cattaneo will succeed Marco Patuano, who resigned earlier
this month over clashes with Telecom Italia's board and its largest
shareholder, France's Vivendi SA, which has built up a 24.9% stake
in the Italian company.
The board's decision to appoint Mr. Cattaneo is a step toward a
much-needed turnaround for Telecom Italia, according to a person
familiar with the matter, after years of declining revenue and high
debt.
The telecom operator has struggled with a lack of a clear
strategic direction able to cope with the twin challenges of a
protracted economic downturn in Italy and harsh competition that
has sent prices spiraling downward in the domestic market, which
accounts for most of the group's business.
According to the person familiar with the matter, the need for a
turnaround became evident in recent months, as the board grew more
and more disappointed with the former chief executive's
approach.
Mr. Patuano—who had served as the company's chief executive
since November 2013—was able to keep such tensions under control
until recently. Clashes became more open after Vivendi gained four
seats on Telecom Italia's board in December and started to exert a
stronger influence in the boardroom.
The person familiar with the matter said the main sources of
tension were poor financial results at Telecom Italia—which in 2015
turned in one of the worst performances in the European telecom
sector—and the way regulatory issues were addressed.
According to Vivendi, the way the Italian company dealt with
regulators and authorities was unacceptable: Telecom Italia was
recently fined for unfair competition behavior, and regulators
urged a change in the way the company dealt with regulatory
issues.
Another person familiar with the matter has said Vivendi was
pushing for stronger cost-cutting measures and to urge Telecom
Italia to address its underperforming Brazilian unit.
Now, with a new CEO on board, one of the people familiar with
the matter said the strategy outlined by Mr. Patuano in February
will remain in place. The former CEO said then that the company
would increase investments in the Italian network, totaling €12
billion ($13.55 billion) during the three-year period ending in
2018.
The new CEO is expected to work more closely with the company's
chairman, Giuseppe Recchi, and will make strategic adjustments if
needed, one of the people familiar with the matter said.
Mr. Recchi is expected to have more powers than he did
previously. These include a stronger control of network-security
issues, as requested by the Italian government, a person familiar
with the matter said. The network is viewed as a sensitive asset,
this person said, because of the information it carries.
One of the people familiar with the matter said Mr. Cattaneo, 52
years old, was chosen by Mr. Recchi, who spent the past week trying
to persuade him to take the role. This person said Mr. Cattaneo
said was selected for his experience at media companies and because
he has worked at companies that are subject to regulatory issues,
such as Terna, an electricity operator. This person added that Mr.
Cattaneo demonstrated the ability to around a business quickly
during his tenure as chief executive of NTV, the train
operator.
In 2015, Telecom Italia posted a net loss of €72 million ($81.3
million) amid nonrecurring charges. Revenue fell 8.6% from a year
earlier to €19.7 billion, while earnings before interest, taxes,
depreciation and amortization fell 20%. Domestic Ebitda, nearly 80%
of the total, also declined 20%.
Write to Manuela Mesco at manuela.mesco@wsj.com
(END) Dow Jones Newswires
March 30, 2016 16:15 ET (20:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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